Number of complaints about banks reaches highest level in 10 years – here’s what’s behind the huge increase

The number of complaints about banking is the highest in 10 years, and the number of fraud practices is the reason for the increase.

According to the Financial Ombudsman Service (FOS), these complaints were ‘at their highest level in at least a decade’ in the 2023/24 financial year.

The FOS also said that more fraud and scam complaints than ever before are being investigated.

Consumers reported 80,137 cases about banking and payment products to the free dispute resolution service last year, a 29 percent increase from 61,995 in 2022/23.

In 2023/2024, consumers filed 24,402 complaints about credit cards, of which 13,584 were due to unaffordable or irresponsible credit provision.

For comparison, in 2022/23 there were 14,504 credit complaints and only 3,723 related to this complaint topic.

Meanwhile, the number of fraud and scam cases has increased by a fifth and is now at its highest level with 27,312 complaints in the 2023/2024 financial year.

About half of these cases involved authorized push payment fraud, where someone is tricked into transferring money online to a fraudster posing as a real beneficiary.

In addition to current accounts and credit cards, the other three categories in the top five of most complained about products were hire purchase (motorcycle), car/motorcycle insurance and conditional sale (motorcycle). All of these categories showed an increase compared to the previous year.

Last year, the FOS upheld 37 per cent of complaints across all areas, slightly higher than the 35 per cent recorded in 2022/23.

The increase was caused by people being concerned about their checking accounts and credit cards, and fearing they would fall victim to fraud and scams.

Consumers complained mainly about administration and customer service, followed by unaffordable or irresponsible lending by financial institutions.

But complaints are not only increasing in the banking sector.

Overall, the Ombudsman sees a higher number of complaints on all fronts, with 198,798 new complaints in 2023/2024 compared to 165,149 the year before.

While the banking sector has received the most complaints overall, the biggest increase was in car finance, with complaints about conditional sales agreements rising by 312 percent in one year.

Abby Thomas, FOS chief executive, said: “It’s always worrying when you see cases rising so sharply, especially as so many people are struggling in the current economic climate.

‘Whether someone is a victim of fraud, struggling with credit card debt or having trouble with their overdraft, they deserve support and understanding from their financial services provider.’

Consumers warned about shady claims companies

An increasing number of complaints are being filed by Claims Handlers (CMCs) and professional mediators.

In 2023/24, these cases represented 25 percent of cases, compared to 18 percent the year before.

The FOS warned that it has seen “examples of both good and bad practice” among professional representatives who assist in making claims for money or a share of compensation.

Some of these representatives Others file mass claims without any substantiation, while others fail to respond to the FOS’s request for further evidence.

The FOS said: ‘Consumers can bring their case directly to the Financial Ombudsman Service free of charge and keep 100 per cent of any compensation awarded to them.’

James Dipple-Johnstone, Deputy Chief Ombudsman at the FOS, said: ‘A quarter of all cases brought to the Ombudsman in the last financial year were brought by professional representatives.

‘While they play an important role in resolving financial disputes, they can also benefit financially from our services without having to contribute to the ongoing costs.

‘Sometimes there is little evidence of due diligence by some representatives to ensure that the claims they make are justified.’